Fortis Board to decide on offers today, shareholder East Bridge wants removal of board directors

The Board of Fortis Healthcare, India's second largest healthcare provider will be meeting today to decide on the four takeover offers it received.

Fortis has four offers on the table — let's see each one of those offers in detail and what shareholders are expecting.

Manipal-TPG consortium offer

Ranjan Pai-led Manipal Hospitals backed by US private equity investor TPG has submitted a revised bid that valued Fortis at Rs 155 per share, a 21 percent higher than the earlier bid that was scorned by investors.

As per the offer plan put forward by Manipal-TPG plan Fortis will de-merge its hospital business into Manipal Hospitals and create a combined hospital business that will be a publicly traded company listed on stock exchanges. Fortis shareholders will get 50 percent stake in the combined entity. The combined entity will then make a right's issue of up to Rs 4000 crore to buy out hospital assets held by Singapore listed RHT.

Manipal also offered to separately buyout 30.9 percent stake in SRL from existing private equity investors by paying Rs 1,113.4 crore.

Manipal-TPG is the only bidder that has done complete due diligence on Fortis Healthcare so far.

Munjal-Burmans offer

Simplest of offers - offer jointly from Sunil Munjal of Hero and Burmans of Dabur to invest Rs 1,500 crore directly into the company. Under the new bid, Rs 500 crore will be infused through preferential allotment of equity shares and the balance Rs 1,000 crore through preferential issue of warrants.

The preferential allotment of warrants will be done at Rs 161.60 a share whereas preferential allotment of equity shares for Rs 500 crore will be done at a price of Rs 156 a share.

IHH Healthcare offer

The offer from Kuala Lumpur-based IHH Healthcare-backed by Malaysian sovereign fund Khazanah lacks details -  it values Fortis Healthcare at Rs 160 per share. IHH told Malaysian stock exchange that Fortis declined to engage with it citing its binding agreement with Manipal-TPG consortium, though Fortis refuted IHH statement saying it's Board is going to consider IHH bid as well. IHH officially remains secretive about its plans but dropped hints that it's not averse to an hostile takeover of the healthcare provider.

IHH has agreed to infuse up to Rs 4,000 crore through preferential allotment of equity shares.

Fosun offer

The Chinese conglomerate known to be active on international M&A circuit - has emerged as the dark horse in Fortis race. Fosun offers to inject Rs 100 crore within the next 45 days.

The Rs 100-crore worth fund infusion will be on the condition that Fortis agrees to a one-month period of exclusivity for Fosun to undertake due diligence and negotiate a proposal to acquire stake in the company.

Post exclusivity period Fosun will consider a primary infusion of up to USD 350 million (approximately Rs 2,300 crore) at a price of Rs 156 per share that shall not enable Fosun to hold 25 percent or more securities of Fortis

What are shareholders saying?

Fortis shareholders have finally seemed to have hit a sweet spot with the onslaught of the bidding war. However, Moneycontrol found out that none of the bids have failed to enthuse shareholders.

One leading shareholder lamented that the price offered by the three interested parties was way below its expectations and unlikely to be accepted in the current form.

He said the valuation should be closer to Rs 200 a share, to make them come on board.

Late Wednesday, East Bridge Capital and National Westminster Bank Plc as Trustee of The Jupiter India Fund issued special notice to the healthcare provider seeking removal of all the directors on the Board.

The two investors for this purpose - called for an extra-ordinary general meeting (EGM) of Fortis Healthcare shareholders.

East Bridge and National Westminster Bank As Trustee Of The Jupiter India Fund together hold 12.04 percent stake in the Fortis.

The two investors have proposed three names for independent directors on the Fortis Board - Suvalaxmi Chakraborty, Chief Executive Officer (India) at State Bank of Mauritius, Ravi Rajagopal, Finance Director, Diageo and Indrajit Banerjee, management consultant

The latest move by the investors comes a day before the scheduled Fortis Board meeting that's expected to decide on the four offers it has received for takeover of the company.

Fortis said it's evaluating the special notice.

"The company is evaluating the same and the same shall be placed before the Board of Directors in due course," the company said in a statement to stock exchanges.

Fortis has now four directors on its Board — Brian Tempest, Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill.

Vaisoha and Shergill were recently appointed as additional directors - those appointments need to be ratified by the shareholders.

Shares of Fortis rose 1.63 percent and were trading at Rs 146.95 on BSE at 9.44 am, the benchmark Sensex gained 0.27 percent to 34,425.18 points.